Raise benefits cap in London for higher living costs, says peer

A higher benefits cap should be imposed in London because of the high cost of living compared with other regions, say town hall leaders.

They are demanding the change after the Government was defeated in the Lords over its flagship welfare reforms.

Crossbench peer Baroness Howe of Idlicote tabled an amendment to regionalise the benefits cap, as proposed by London Councils which represents the 33 boroughs. "If the Government want a benefit cap that fairly reflects average earnings, it would be logical and just for the cap to reflect geographical variations, not only in wages but in other important living costs such as those related to accommodation and childcare," she told the Lords last night.

She stressed that average private sector rents in London, at £222-a-week, were more than 36 per cent higher than the national average.Childcare in London and the South- East is at least 20 per cent higher than the national average, she added.

A nursery place for a child costs an average of £113 per week in London and the South-East, compared with the national average of £94. Average earnings in London are £31,935 compared with the national figure of £26,133, she stressed.

Work and Pensions Secretary Iain Duncan Smith said there may be an "argument" for the regionalisation of the benefits cap but suggested that individuals calling for it should also back different benefit rates around the country.He brushed off the Lords defeat and vowed that the Lib-Con coalition plans to cap benefits at £26,000 will be implemented "in full".

Crossbenchers also supported the amendment which was carried by 252 votes to 237.

About 67,000 families will lose on average £83 a week under the cap, which is due to be brought in next year. More than half of these households are in London.

Nearly 7,000 families who will be affected by the benefits limit have six children or more.

A tax statement could be sent to all taxpayers, detailing how much they are paying towards benefits, state pensions, schools, transport, housing and other public spending. The move is being pushed by Tory MP Ben Gummer and is said to appeal to Chancellor George Osborne.